The market environment heavily influences corporate decision makeing ability. Discuss the difference in executive decisions concerning pricing, product design, and advertising between a company that exists in a perfectly competitive market and a company that lives in a monopolistic competitive market.
Market structure is typically modeled along a continuum with monopoly at one extreme and perfect competition at the other. You might imagine a market continuum as follows.
<<Perfect Competition Monopolistic Competition Oligopoly Duopoly Monopoly>>
It is probably best to start with PERFECT COMPETITION. A perfectly competitive industry is characterized by three things.
1) There are many firms in the market.
2) Firms produce an identical product.
3) There are no barriers to entry.
Because of this we say firms operating in a perfectly competitive ...
Contrast factors such as pricing, product design, and advertising.